Wonder Machines Inc. ("Wonder") is a corporation located in BostonMassachusetts. It manufacturers a wide variety of medical devices.It decides to sell off one of its many business lines. It indicates in materialposted online and given to prospective purchasers that the reason for thisdecision is that it wants to focus its efforts on manufacturing test kits forviruses. The business line it wants to sell manufactures medical devicesthat deliver radiation therapy to cancer patients, and this is too far removedfrom the are on which it wished to concentrate its effort.It sells these unitsdirectly to hospitals in the USA and depends on a network of distributorsand agents to sell these devices outside of the USA.

Initial Contact

A company located in Ottawa, Canada called Canuck Medical Devices Ltd.approaches Wonder directly and sends the following email to the President,of Wonder:"Dear Jamie:We understand that your cancer therapy product line is for sale. We areinterested in making an offer to purchase the product line provided we cannegotiate mutually agreeable terms and are satisfied that your product lineis of high quality and state of the art."Jamie, the President responds by email and invites Canuck to inspect thepremises.Jamie says in the responding email "I can assure you that ourproducts are of the finest quality and reliability". Canuck visits themanufacturing facility and are impressed.

Key Terms of the Sale Agreement

The parties sign a sale agreement on January 31, 2021, that contains, inpart, the following clauses:"Wonder Machines Inc. (hereinafter the Vendor) agrees to sell to CanuckMedical Devices (hereinafter the Purchaser) all those assets listed inSchedule "A" of this Agreement for the sum of $121 million US. The closingdate of this transaction shall be April 30, 2021."Schedule "A" includes 42 manufactured units, patents on the design filed inCanada, the USA and the EU which each have another 12 years to runbefore expiration, title to a small building in Boston owned by the Vendor inwhich the product line is manufactured and which also includes all of theequipment used to manufacture the units."The Vendor represents and warrants that there is no litigation related to orin connection with its cancer therapy units. No other representations orwarranties are made by the Vendor to the Purchaser.""The Vendor shall indemnify and hold the Purchaser harmless inconnection with any liabilities arising out of or in connection with any sale ofunits finalized before the closing date of April 30, 2021.""This Agreement is the entire agreement between the parties andsupersedes all prior understandings, agreements, and communicationswhether written or verbal.""This Agreement is governed by the laws of Ontario and the courts ofOntario shall have exclusive jurisdiction over any dispute related to thisAgreement."

Events After the Deal Closes

The transaction closes on schedule on April 30, 2021.Wonder gets ispayment of $121 million US and Canuck gets title to all of the assets listedin Schedule "A" and all relevant distributor and agency agreements areassigned to it.Canuck is served with a class action in Ontario filed on behalf of 300patients who received too much radiation from units between May 15 2021,and June 30 2021 in Spain and which were sold to hospitals in Spainbetween March 1, 2021 and June 15, 2021. Both Canuck and Wonder areDefendants. The claim is for over $400 million US.The claim asserts thatWonder knew there were manufacturing defects in the units and sold the product line for that very reason. Wonder denies all of this and states thatthe problem arose because their distributor in Spain made a mistake intranslating the user instructions and this caused the 300 deaths.

Assignment Question based on the scenario above:

1. Whatarguments will Canuck have against Wonder? One of the arguments is that Cancuk had not yet purchased the products when they units were shipped to Spain as it that it was sold to the hospitals between March 1 and June 15 2021, despite the fact that the deal their deal was completed April 30 2021. Elaborate on this argument in more depth?
2. Is there anything in the contract that will make the argument that Canuck thought that he was receiving high quality units without any defects, since Jamie the president of Wonder said "I can assure you that our products are of the finest quality and reliability"hard for Canuck to use as evidence?
3. How does Indemnity clause relate to the argument that Wonder only received the lawsuit after he sold the production line and not before?